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Hello and happy weekend! Today we’re talking insurtech, SPACs and how well direct listings can manage the IPO pricing question. But first, crypto.
The crypto beat was busy this week, with Coinbase earnings giving us a good look into just how busy trading activity was for the asset class in the third quarter. If you recall Robinhood’s earnings, what Coinbase had on offer won’t prove a surprise. After the American equity investment platform’s crypto revenues fell sharply, Coinbase also posted declines in its aggregate trading volumes and revenues compared to the second quarter of the year.
In related news, FTX’s U.S. operations disclosed some of its own performance data, indicating that growth is still possible in the crypto trading market despite a general downward trend in the three-month period wrapping up this September.
All that’s to say that the crypto market continues to evolve — molt? — rapidly. From one quarter to the next, activity surrounding major chains and smaller coins can fluctuate rather sharply. For companies like Coinbase, this means variable revenues and profits.
But as Coinbase is cash rich, near-term ups and downs aren’t that big of a deal, so long as the long-term trajectory of crypto activity remains positive.
Another set of companies betting on a long-term upward trend are crypto-gaming companies. And they have been very busy in recent months. For example, Patron raised a $90 million fund to invest in crypto-based games; Mythical Games raised $75 million this summer to build crypto games; a trading card game called Parallel raised at a $500 million valuation; and Axie Infinity raised a round earlier this year.
This week, Forte raised $725 million for its crypto-gaming infrastructure. This leads to me to wonder just how much capital the blockchain games can absorb in the near term. After all, games have historically proven to be poor venture capital investments, at least per traditional venture capital thinking. Why? Because games can prove rather hits-based, with certain titles performing well but fading in revenue terms after their launch.
